I have data which primarily contains territories by 3 digit zip code, but there are some 5 digit zip code "exceptions". Is there a way to feed this mixed list of 3 and 5 digit zips into the "Create Territory Wizard" and have it map correctly?

Example of data:

Zip Territory
010 A
011 A
012 B
01267 C
01247 C

So it should map 01267 and 01247 as territory C and the rest of 012 should be territory B.

Thanks in advance!

You can only use one level of granularity to map territories, i.e. either Zip3 or Zip5.
You'll need to expand your data to include all 5-digit zips and assign each to a territory.

HTH
-Paul